Presenting a live 90 ‐ minute webinar with interactive Q&A FLSA Litigation and Enforcement: Latest Challenges Complying With Off ‐ the ‐ Clock Work Prohibitions, Tip Credit and Tip Pooling Rules, and Time Reporting Requirements TUES DAY, DECEMBER 7, 2010 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific T d Today’s faculty features: ’ f l f James F . Glunt, S hareholder, Ogletree Deakins Nash Smoak & Stewart , Pittsburgh Richard D. Tuschman, Member, Epstein Becker & Green , Miami, Fla. Matthew W. Ray, Partner, Jones Day , Dallas The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10 .
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FLSA LITIGATION AND ENFORCEMENT: LATEST CHALLENGES Enforcement Trends and Best Practices December 7, 2010 4
FLSA Litigation Surge FLSA Litigation Surge • In 2003, there were 2,715 FLSA lawsuits filed in federal court i in the United States th U it d St t • By 2009, that number had increased to 6,165 • In six years, FLSA filings were up 227% • • Hot spots: Florida California Illinois New York and Texas Hot spots: Florida, California, Illinois, New York, and Texas account for over 70% of FLSA litigation 10000 5000 FLSA Filings FLSA Filings 0 2003 2008 2009 5
DOL: Appointments DOL: Appointments New Faces at the DOL: • Patricia Smith was confirmed as the DOL’s Solicitor Patricia Smith was confirmed as the DOL s Solicitor • Chief Administrative Law Judge John M. Vittone retired on March 3, 2010; Judge Stephen L. Purcell was selected to serve as Acting Chief Judge Judge Smith Purcell • • Labor Secretary Hilda Solis (2009) Labor Secretary Hilda Solis (2009) – New Sheriff in Town – “New Sheriff in Town” speech to union activists 6
DOL: Budget DOL: Budget • Increases in DOL agency budgets • $121 million increase for the Employee Benefits Security Administration, the Employment Standards Administration, OSHA, and the Mine Safety and Health Administration – 600 new enforcement and compliance personnel at these agencies • $25 million increase for the Wage-and-Hour Division $ g – 100+ new enforcement personnel • Initiative for misclassification of independent contractors under the FLSA FLSA 7
DOL: Amicus Briefs DOL: Amicus Briefs • • Cumbie v. Woody Woo, Inc. Parth v. Pomona Valley Hospital (9th Cir.) Medical Center (9th Cir.) • tipped employees • whether reductions in hourly rates violate FLSA • In re Novartis Wage and Hour Litigation (2nd Cir.) • Christopher v. Smithkline Beecham Corp. (9th Cir.) • pharmaceutical sales reps • pharmaceutical sales reps pharmaceutical sales reps • Ervin v. OS Restaurant Services, OS S Inc. (7th Cir.) • Fast v. Applebee’s (8th Cir.) • supplemental jurisdiction in • tipped employees hybrid case • Kasten v. Saint-Gobain • Parker v Nutrisystem Inc Parker v. Nutrisystem, Inc. Performance Plastics Corp. Performance Plastics Corp (3d Cir.) (S. Ct.) • supplemental jurisdiction and • retaliation section 207(i) • Perez v. Mountaire Farms, Inc. (4th Ci ) (4th Cir.) • donning and doffing 8
DOL: Coordination with Academia and the DOL: Coordination with Academia and the Bar • “Improving Workplace Conditions Through Strategic “I i W k l C diti Th h St t i Enforcement” • Report funded by DOL to WHD from David Weil at Boston U i University it • Suggests “strategic enforcement” in certain industries • Encourages use of civil litigation to enhance deterrence and improve ongoing compliance • November 19, 2010 announcement by Vice President Joe Biden of initiative by the Labor Department and the ABA to help workers access private legal services 9
DOL: Independent Contractor Initiative DOL: Independent Contractor Initiative • Federal government and states are paying more attention than ever: • Obama’s 2011 Budget explains that the DOL and Treasury are proposing a joint initiative that y p p g j “ enhances the ability of both agencies to penalize employers who misclassify .” • DOL - $25 million and 100+ enforcement personnel • DOL - $25 million and 100+ enforcement personnel • IRS announced that it plans to audit 6000 randomly selected employers to ensure compliance with employment, FICA, and Medicare obligations l t FICA d M di bli ti • 37 states have launched initiatives as well 10
DOL: Independent Contractor Initiative DOL: Independent Contractor Initiative • FY 2011 budget request from DOL seeks to raise $7 billion over 10 years by targeting misclassification • Purpose is enforcement of existing laws • $10.9 million for pilot program to reward state efforts $10 9 illi f il t t d t t ff t • $1.6 million and 10 employees for DOL legal team • Target: “largest multi-state employers” who • Target: largest multi-state employers who misclassify • Employee Misclassification Prevention Act (Introduced 4/22/10; in committee) 11
DOL: Independent Contractor Initiative DOL: Independent Contractor Initiative Proposed Rule On Misclassification • Not yet issued, but “high priority” according to Labor Solicitor Patricia Smith • Will amend FLSA recordkeeping rules Will d FLSA dk i l • Current plan to require employers making a classification decision to complete a written classification decision to complete a written analysis, maintain the analysis as an FLSA record, and provide certain wage and hour information on pay stubs pay stubs 12
DOL: Independent Contractor Initiative DOL: Independent Contractor Initiative • Tests for “employee” status p y – The common-law agency test (i.e. the control test) – The economic realities test – A hybrid test which combines the agency test and economic realities test and economic realities test • IRS Test • NLRB/Entrepreneurial Opportunity Test NLRB/Entrepreneurial Opportunity Test 13
DOL: Independent Contractor Initiative DOL: Independent Contractor Initiative Common Law Agency Test The degree of control over details of The extent of the worker’s discretion work over when and how long to work Whether a high level of skill is Whether the worker is paid by the job required by the occupation i d b th ti Who supplies the means, tools, and Whether the worker hires and pays place of work her own assistants Location where the task is performed Whether the work performed is part of the hiring party’s regular business Duration of the relationship Whether hiring party provides traditional employee benefits traditional employee benefits Whether the hiring party has the right Worker’s treatment for tax purposes to assign worker additional projects 14
DOL: Independent Contractor Initiative DOL: Independent Contractor Initiative Economic Realities • the degree of control the business has over the way in which the work is performed • the worker’s opportunities for loss or profit based on his managerial skill • the worker’s investment in equipment, materials, or in hiring additional workers • the degree of skill required for the work • the permanence of the working relationship • the degree to which the worker’s services are an integral part of the degree to which the worker s services are an integral part of the putative employer’s business 15
DOL: Independent Contractor Initiative DOL: Independent Contractor Initiative • The Hybrid Test • Examines the “economic realities” of a particular situation but also asks the control question central to the common-law test 16
DOL: Independent Contractor Initiative DOL: Independent Contractor Initiative Internal Revenue Code • behavioral evidence • financial evidence • evidence as to the type of relationship 17
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